Current Events Public Policy

The Baucus Plan

What is Max Baucus proposing in his inital health reform bill?  Most of the principles are based on the Senate Finance Committee 2009 white paper.  Below 

  • Creation of a Health Insurance Exchange. Insurers participating in the exchange could would be precluded from discriminating based on pre-existing conditions.
  • Expand Medicaid to all individuals below 133% of the federal poverty line.
  • Expand SCHIP to cover all children in household below 250% of the federal poverty line in 2013.
  • Reduce Medicare Part D ‘donut hole’ so that enrollees in the donut hole range only pay 50% of drug costs rather than 100%.
  • Standardize benefits into 4 categories: bronze, silver, gold and platinum.  
  • Excise Tax: Levy a non‐deductible excise tax of 35% on insurance companies and plan administrators for any health insurance plan that is above the threshold of $8,000 for singles and $21,000 for family plans.  
  • Individual Mandate with tax subsidies.  Those with incomes between 133% and 300% of the FPL would be eligible for these subsidies.  Those who don’t get health insurance will be subject to a fine.
  • Employers who don’t provide health insurance must contribute to a fund to cover government insurance/subsidies for these individuals. Small employers with less than 50 employees are exempted from this requirement.
  • Small business subsidy.  Businesses with the fewest workers and the lowest wages would be offered a new tax credit to purchase health insurance for their employees.  The subsidy is up to 35% of the business’s contribution.  
  • $6 billion for co-ops.  This money would be used to fund the start-up costs and capital requirements for these co-ops.
  • Preventive Services: Eliminate Medicare copayment for preventive care.  Provide financial incentives to encourage Medicaid to cover preventive care services without copayments.
  • Do not cut Medicare physician payment according to the SGR.  Instead, increase Medicare physician compensation.
  • Malpractice reform. Allow states to develop alternatives to the current tort litigation system.

Ezra Klein also has a nice review of parts of the Baucus bill: Exchanges, Insurance Regulation, Affordability, Individual Mandate, Co-ops, Taxing Insurers.  Time magazine also has a FAQ on the Baucus bill.

Also see  the CBO and CBPP analysis of the plan.


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